Chapter 12.1, Problem 21E

To determine

To select the best option for the equation of the least squares regression line for predicting selling price from appraised value.

Answer to Problem 21E

The option (c) is the correct option.

Explanation of Solution

In the question, appraised market price and the actual market price are compared and the computer output of the data is given. Thus, as we know that the general squares equation is given as:

  $\text{<mover accent="true"><mo> P</mo><mo>^</mo></mover> rice}=a+b(\text{appraised value})$

The y -intercept a is given in the column of “Coef” and in the row of “Constant” as:

  $a=127.27$

And the slope b is given in the column of “Coef” and in the row of “Appraisal” as:

  $b=1.0466$

Thus, the least squares regression equation then becomes as:

  $\begin{array}{l}\text{<mover accent="true"><mo> P</mo><mo>^</mo></mover> rice}=a+b(\text{appraised value})\\ \Rightarrow \text{<mover accent="true"><mo> P</mo><mo>^</mo></mover> rice}=127.27+1.0466(\text{appraised value})\end{array}$

Thus, the option (c) is the correct option.